Last modified on September 28th, 2022
By Megan Eales Monroe

Property inspections can be cumbersome and costly, but they’re vital for protecting the bottom line.

Rather than seeing inspections as just a must-do on your checklist, our two guests this week believe that by optimizing your inspection process, you’ll see a multitude of benefits for property managers, investors, and residents alike.

Michael Brand, Mid-Market Account Executive at HappyCo, and AppFolio Property Manager’s Senior Product Manager, Kelly Dean, join this episode of The Top Floor podcast to explain exactly why. Michael and Kelly explore the benefits of doing inspections the right way, how to streamline operations, and why tools and tech are essential to nailing your inspection process.

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Meet Our Guests:

Michael Brand is a Mid-Market Account Executive and has been with HappyCo for three years. He graduated from the University of Colorado with a Bachelor’s in Environmental Studies. After spending time in the renewable energy sector, he fell into a career in sales and has done everything from business development to running high-performing sales teams. Michael now resides in Grand Junction, CO, which is where he spends his free time outdoors, working on his cabin, and visiting the various orchards, vineyards, and farmers markets in the area.

Kelly Dean is AppFolio’s Senior Product Manager. She joined AppFolio in 2019 and has worked across teams with a focus on AppFolio’s suite of Maintenance features. Her favorite part of working in Product is the ability to make a positive impact on people’s lives. In her spare time, Kelly enjoys traveling, gardening, cooking, and all things outdoors.

 

 

Episode Transcript

Megan: Everyone in the property management industry knows that inspections are a must. But inspections are about so much more than just checking boxes and conducting ongoing maintenance. As we’ll explore in this episode, inspections are key to driving NOI, increasing profitability, keeping teams happy and focused on doing their best work, and improving resident satisfaction and retention.

That’s why we’re going beyond inspection basics in our discussions and taking a deep dive into how to really nail property inspections every time. To do so we’re joined by two inspection experts, Michael Brand, who’s a Mid-Market Account Executive from HappyCo, an AppFolio stack integration partner, and also Kelly Dean, Senior Product Manager at AppFolio. First up, let’s get to know Michael and a bit about HappyCo.

Michael Brand: My name is Michael Brand. I’m a Mid-Market Account Executive for HappyCo. I think, simply put, HappyCo has created mobile inspection software and tools that really allow you to get a rich and complete picture of every unit and property in your portfolio at every stage in its life cycle. I would say we really excel at things like the unit turn and make-ready processes, fire and life safety, and all those recurrent inspections, preventative and ongoing maintenance, work order management, virtual maintenance, after-hours emergency calling, all that kind of stuff.

Megan: Because inspections are such a common and routine component of property management, it’s easy to just think about them as something we have to do to maintain the state of properties and portfolios.

But, as we mentioned before, inspections can do so much more for property management businesses than just help your team stay on top of necessary repairs. To dig deeper, we asked our guests: why exactly are inspections so vital?

Michael Brand: Yes, it’s an easy question, but it’s an important question. And I would say inspections are vital, because one, it’s just how you get your finger on the pulse of your portfolio and how you know what’s happening. From a property management perspective, inspections are the tools that really help you increase your property’s value, minimize your risk, increase your team’s efficiency, and really improve just the overall conditions of the property. Essentially, the data that you’re capturing in these inspections is the key to allowing you to make really informed quality management decisions.

Megan: Now that we’ve got to know Michael and his thoughts on inspections, let’s hear from Kelly.

Kelly Dean: I’m Kelly Dean. I’m a Senior Product Manager at AppFolio. I’ve been working in the maintenance space for the past few years. And a little bit about our team’s vision for maintenance. So we know that maintenance is one of the core drivers of NOI, it’s one of the core drivers of resident experiences. So we know it’s critical to our customer’s success. And through our suite of features, we aim to deliver actionable data so that customers can make quick decisions and ensure accountability.

I think with inspections, there is that time-saving and efficiency component. I think it really comes down to protecting the assets, whether you’re an owner/operator or a manager, it’s about protecting the assets of the owners. That’s where inspections will really benefit you. And then also the mindset of, where possible, shifting from a reactive mindset in maintenance to a proactive, systems-based, getting-ahead-of-it mindset. Which again, the time-saving aspect, keeping good people, creating an environment that everyone likes to work in a more proactive environment versus putting out fires, which inherently happens in the world of maintenance. But where possible, getting ahead of it is just really the best.

Megan: As Michael and Kelly both mentioned, inspections are key to helping property management organizations make informed decisions, especially when it comes to driving NOI.

This is especially important when you consider that one of the biggest findings from a 2022 AppFolio report was that staying profitable and controlling costs are putting an immense amount of pressure on property management teams right now. It’s also a top concern within property management overall. To explore just how much weight inspections carry when it comes to NOI and why, Kelly and Michael dive deeper…

Kelly Dean: My mom used to say, “an ounce of prevention is worth a pound of cure.” So I think that definitely applies when you think about routine inspections. Anytime you can catch an issue early and prevent long-term damage to your property or to your assets, that goes straight to your bottom line. And also, if you’re keeping track of your assets with regular inspections, you can budget for repairs. And if you think about supply chain issues and budgeting issues, if you can plan for repairs of your larger assets ahead of time and get that from your owners, that’s going to be a lot smoother for your team. You can handle those repairs when it works best versus waiting until something breaks down.

Michael Brand: Yeah. NOI and inspections are very intertwined, and NOI is just really important. I mean, the bottom line of being profitable is very important. I think, first and foremost, you have to be on top of your asset’s condition. This will lower your liability. You’re going to reduce replacement costs, both of which raise NOI.

If you’re adopting technology and creating greater efficiencies with your team, for example, speeding up your unit turn, my favorite example. If you’re reducing the time a unit’s vacant, you’re going to save a ton of money there. You’re also going to reduce labor costs and operating costs, both of which raise the NOI. If you have actionable data versus just guessing, you can better manage the property. And truly, if you have a more desirable place to live, you’re taking care of the community, happy residents equal much higher occupancy, also raising the NOI.

Megan: There’s an entire layer to inspections that is often overlooked, which is the ability to produce incredibly rich business insights and invaluable data.

As we just heard from Kelly and Michael, inspections can lead to opportunities for cutting excessive or unnecessary costs, making processes more efficient, and boosting resident satisfaction. But if you’re not standardizing when and how that data is collected, you’re really blind to all of those opportunities, as Michael explains.

Michael Brand: Yeah, I think the future with inspections and really all of your property operations is digitizing, going mobile, and truly, it’s just all about the efficiency and standardization. If you’re able to standardize templates and create workflows that are across the board, you’re going to create more efficiencies. You’re saving time, everyone’s on the same page. So you’re just getting a lot more impact and use out of the team, but you’re also creating baselines and understanding just where you’re at. How can you make adjustments if you’re not tracking the data and knowing where you’ve got gaps and deficiencies?

So I keep mentioning big things like the unit turn. This is going to come up a lot. I just think it’s an important part of the business that has a major impact on NOI and things like that. So if you know how long on average it’s taking to turn a unit, for example, that would be a very valuable performance indicator or perhaps with work orders, having an understanding of where your issues are coming from or how long a particular category like appliances or windows are taking, or even just insights into your staff and efficiencies there, there’s really no other way to spot these trends and see these things without having reporting and be able to slice and dice the data truly.

And it really does start with how you create the templates because how you create your templates, dictates how your workflow’s going to go, and it really dictates what you’re trying to accomplish on the back end. You really have to design all this intentionally, not only to dial in your workflow and make your team more efficient but also to really spit out the reporting and the information you want on the backend. Again, to make quality decisions in real-time.

Kelly Dean:  So if you’re still using paper for your templates and you run out to the field, that’s just going to require double entry for someone. And any time there’s double entry, first of all, it’s frustrating for your team. And second of all, there’s room for data loss, right? Someone might not transcribe that correctly. And it’s hard enough to hire great staff and retain great staff. You want technology that makes their job reliable, with reliable data that you can trust.

Megan: In an ideal world, you’d be able to collect all the data you need to better understand just how your inspection processes are impacting NOI. But that’s far easier said than done.

Inspection processes are complex, with multiple steps, interdependent handoffs, and a series of tasks that have to be completed in the right order, at the right time, in order to be effective and efficient. Michael explains what he’s seeing in the industry today, plus what’s preventing maintenance teams from collecting all of this essential inspection data.

Michael Brand: The state of inspections today, I would say one, is all over the map and actually somewhat sorry in many cases. I think one thing I could comment though, is a common thread that I’m seeing is everyone wants to be doing more in terms of inspections, and essentially their processes and tools are what’s holding them back. And this could be a situation with your manual pen and paper, Google Drive, Excel spreadsheets, but this could also be the case where you’ve adopted software. It’s just cumbersome and not easy to use. Essentially, these things prevent you from doing things you want to do, preventing pre-move-out inspections, maybe quarterly property audits, or something really important, say gathering photos during an inspection.

Certainly, most people are trying, but the processes are broken, or the tools are just so inefficient and cumbersome that you just can’t execute. So I’d say it’s really all over the map, but truly the processes are backward. And certainly, the tools aren’t helping. They’re getting in the way, in a lot of cases.

Megan: In addition to broken processes and inefficient tools, the pandemic certainly has also led to an increased need for regular and preventive maintenance.

Michael Brand: Yeah. The pandemic certainly has affected things like wear and tear. I think, firstly, from a resident’s perspective, residents are home more. So there’s going to be more wear and tear, more damage because people are there in the space, using it more, but also when you’re home all the time, these issues are front and center and top of mind. So you’re going to create more tickets. So certainly, this has always been an issue, but it’s definitely been ratcheted up with the pandemic.

I think, in general, residents want to be involved, and having inspections is a way to be more transparent and get everyone on the same page. Whether that’s sending a move-in and move-out inspection directly to the resident or literally just having all the data time-stamped and out in the open, I think this will decrease the number of issues and disgruntled residents that you have. You should also be able to recoup a lot more damage charges. And in general, just have happier residents with fewer issues.

Megan: Kelly has seen the same thing with AppFolio customers and heard it first-hand from their feedback.

Kelly Dean: Since the pandemic, residents spend more time at home, which adds more wear and tear. Also, working from home means increased expectations for maintenance requests to be scheduled promptly. We have a data point that around a third of renters in the US say faster resolution of maintenance requests and proactive communication became more important in the pandemic.

So I think that stat I shared about renters expecting faster resolutions and more proactive communication. You know, scheduling becomes more important if you’re working from home all day, you’re in meetings, you’re juggling kids being at home. It matters a lot more that you have direct lines of communication open, you understand when someone would be coming to your home, for how long, just all of that.

When it comes to your own residence and thinking about inspections there, make sure that you set expectations for when those inspections will occur. Notifying in advance and really just proactive communication, so there’s no question about when something’s happening, I think if done in the right way, really shows that you care.

Megan: The state of inspections is inconsistent (at best), which isn’t ideal when resident expectations are rising. With the pandemic also affecting maintenance teams and how effectively they can do their jobs, inspections can seem impossible to conduct on a regular basis, let alone in an efficient and streamlined way.

Michael Brand: Now, from the maintenance perspective, and really this is another common theme that I’m seeing across the board, is that most maintenance teams are really overwhelmed, underwater, understaffed, behind. Certainly, the pandemic has added to this, but this is already, I think, an ongoing problem. Now to add on top of this, it’s really hard for the maintenance team to do their job, especially if you’re doing manual processes, it’s just such a huge burden on your staff.

Manual processes are time-consuming. They’re incredibly frustrating. They’re prone to mistakes. It can hurt morale and productivity. I mean, if you can imagine having to print out work orders, write notes in pen and paper or work off paper checklists, having to transcribe a teammate’s poor handwriting, uploading pictures in Dropbox, data entry in Excel. I would want to tear my hair out. So all these things very much impact how the maintenance team is working and just their overall happiness and production. So major impact.

And truly, our goal is to make everyone in the ecosystem along the chain, every stakeholder, we want to bring a happier experience to. And maintenance perhaps is on the top of the list. They seem to be neglected the most and asked to do the most.

Megan: Knowing just how vital inspections are to achieving business outcomes, keeping residents satisfied and safe, and helping teams do their best work, we asked Kelly and Michael: What does it take to really nail inspections? When it comes to deciding where to start first, Kelly and Michael are in complete agreement.

Kelly Dean: So key components to really nailing your inspections. I’ll say first, set yourself up for success with inspection templates. Our templates are smart, and they will adapt to the bedroom/bathroom count of the unit that’s being inspected. But yeah, having your templates. So making sure that you and your team are really clear on what needs to be inspected. When you’re doing your inspections, flagging maintenance issues as you go will allow you to quickly turn them into work orders. And then sharing your inspections afterward with owners and tenants, and tenants can digitally sign. And so, you can have that tenant really lock everything in and acknowledge that this was the state of the unit that you both agree on.

Michael Brand: Yes. First, it’s got to be clear and concise templates that are just easy to use and make going through an apartment simple. This also ties in with an easy mobile experience on your phone, on an app. It’s boom, boom, boom, inspecting, you’re out onto the next unit, onto the next item. Next, I would say to be able to generate work orders from inspections, generate reports from those inspections, and then tie it all together, you got to have the quality reporting. What’s the point of gathering all this great data if you’re not synthesizing it, utilizing it, reporting off of it? Then it’s all really for nothing.

Megan: So templates are the first step to aligning everyone on what to do during inspections and exactly how to complete them. But as Michael also mentioned, generating reports from those inspections is just as important once you have those templates in place.

However, in order to gather that great, reliable data to generate meaningful and insightful reports, you need the right tools and technology in place. However, new tools and technology aren’t always well received by maintenance teams. And that’s especially true when those tools and technologies are not easy for maintenance teams to use or adopt, as Michael explains.

Michael Brand: A lot of issues will spiral from going back and forth from systems, data entry would be a great example. And if you can’t trust the data, what are you doing? I think it’s getting in the way of the mechanics actually doing the job, physically getting in and out of systems. You’re wasting time, it’s creating more of a headache for the team when really you want to be simplifying the process and taking the thinking out of it for your team.

One of the biggest fears, and why maintenance teams are hesitant to adopt technology, is because they’ve had really poor experiences in the past. These other tools and systems and other software have been really painful to adopt and implement, and just a painful experience in general and actually hurt their productivity and made their jobs harder, not easier.

So I think a lot of people are hesitant for that reason. I think a way to combat that is one, by being upfront and honest with the change, being clear with why the change is going to be beneficial, but also trying to tackle the easy wins and the low-hanging fruit. If you can get some easy wins and gain some adoption, then it’ll start to snowball in a positive direction. You’ll get people to start evangelizing for you. And once they start to realize that their job is actually easier, they’re empowered and can do more with less. It actually becomes very much an easy proposition to continue to roll out and get more use out of the platform.

Megan: Making inspection technology easier to use is actually something that Kelly and her team are specifically focused on. By listening to customers and hearing how their teams actually use and want to use inspection technology, they’ve been able to make critical user experience adjustments for onsite inspection teams.

Kelly Dean: So inspections are, and we know this, they’re completed out in the field. We’ve heard a lot from customers that they commonly have properties with inconsistent service. Maybe their team only has Wi-Fi-only devices, and they’re not connected to Wi-Fi units. Or employees use their personal devices and don’t want to use their own data. You’re taking potentially hundreds of photos. That’s a lot of data to be consistently uploading. So we have developed offline inspections capabilities, which is really necessary to ensure that no matter what your Wi-Fi or connectivity is like, you can successfully and efficiently document the state of the unit, send it to your residents, take all your photos and not have to worry about data or connectivity.

Megan: Once you get inspection templates created and start tracking data through the right tools and systems, you can get a much better, big-picture view of what’s really happening across your entire inspection ecosystem.

These new insights may reveal more than you originally anticipated. But instead of trying to fix everything at once, Michael and Kelly both advocate for thinking small to make a big impact. Specifically, look at where inefficient processes may be holding your team back by wasting valuable time, resources, and energy. To help you spot those inefficient processes, Michael and Kelly reveal some tell-tale signs.

Michael Brand: There are some very common symptoms and indicators of an inefficient inspection process. One would be poor or lots of communication back and forth. Maybe slow turn times like units aren’t turning very fast. Maybe work orders are piling up, perhaps litigation, maybe they were just in court and facing legal action, perhaps poor property conditions. The curb appeal is not where it should be. Lights are out, things like that. Maybe using multiple systems or just not being able to tell me what’s happening or to share any standard performance indicators. I think those are all examples where I would guess that their inspection process is inefficient.

Kelly Dean: Yeah, I would say outward signs could be poorly kept common areas. Or requests that come in that when your maintenance tech goes in and sees, okay, this problem has been around for a long time, it’s something that we could have caught. We encourage the approach that if someone’s already in a building conducting maintenance, that could be a good time to take a little look around and make sure, okay, it seems like this place is being kept up and we don’t see any major red flags.

Another general thought that you might not have the best inspection process is if you see that you have a really inefficient unit turn process. So if you know your resident’s moving in and it’s like, oh, well the stove never got fixed. Or there’s chipped paint, and if it feels like your team is a bit of a mess on that move-in/out process, it could be because you’re not doing inspections as efficiently as possible. Maybe you’re not using a template, not documenting thoroughly enough, or things are falling through the cracks when it goes from the inspection to the work actually being done. Having a system where you can pinpoint where those problem places are will definitely help and would be a sign that there’s room for improvement.

Michael Brand: If you can’t add teammates and pour more resources in, which I understand, it’s a tight economy, it’s not necessarily feasible for companies to do this. I would say it’s vital that we tackle the easy wins, the low-hanging fruit — what’s going to make the most impact on the business? Move-in, move-out is consistently a process that’s somewhat broken and has areas to improve. Not only that but if you can get it right, the move-in and move-out process has a huge impact on your profitability and your operating costs.

Two, I’d say utilizing the integrations. If you can streamline and automate your flow for things like your project board, like your make-ready turn board, and have it happening in the background, that’s a way to do more with less, I would say.

Megan: Michael mentioned doing more with less, which is an all-too-common scenario that many property management organizations and team members find themselves working through today.

Because hiring and onboarding take time, businesses must now look for ways to augment their existing staff in order to prevent them from burning out with an overloaded to-do list. Automation is one incredibly effective way to do so and can help team members save their limited time and availability each day for high-touch customer service, which is essential for keeping resident satisfaction and retention high.

Michael Brand: There are major, major risks by doing things manually and not having a digital system you can trust. I think, first and foremost, that the biggest risk is just not having reliable, accurate data and information. For one, it’s just really difficult to manage a portfolio of big-time properties and assets and value, not to mention it’s a major liability risk. Second, it’s wasted time. These manual processes are slow and time-consuming. This all equals higher labor and higher operating costs. And then really, you’re risking again, having unhappy staff and workers by having these really inefficient manual processes, it doesn’t make you happy.

So any way you can save time or money is a good thing. I think the best way to do it is just streamlining the workflow to save time. This could manifest in a few ways. One, it could be just the automations that you’re gaining from integrating. Maybe it’s as simple as just having easy mobile tools in the field. So you’re actually getting inspections done in 20, 30, or a minute faster, or 20, 30 seconds faster, a minute faster. Maybe it’s just the greater visibility between your staff and management, or communications are smoother. Everyone’s on the same page. Perhaps it’s creating work orders and inspections all in one ecosystem. Basically, all these save time, save labor costs, increase the property’s value, all good things.

I would say big investments are one, definitely the virtual tools, remote tools. That’s here to stay. That’s not going anywhere. Residents are expecting that kind of communication more. These are ways to automate your teams, empower your teams, and get more done with less. So I’d say the remote and tele-maintenance tools are going nowhere, whether that’s simple things like sending inspections to residents, or being able to do an interface like this with a camera where you’re actually directing a camera operator in the field, or if literally, you’re addressing maintenance issues remotely, all these things are going to be the forefront. I also think that there’s going to be a lot more investment in a premium to integrate.

Again, it’s something I’m asked for all the time. People want simple solutions that talk with each other. And I truly believe, for example, that we are stronger together integrating, or even HappyCo in general, I think HappyCo, in general, is stronger as an integrated partner than a standalone. And especially seeing the relationship with AppFolio where we’re really both on the same page, and we put a ton of time and effort for a common goal. So that’s, I guess, a really big reason why I’m excited about the partnership in general.

Kelly Dean: Yeah, definitely. So I might have mentioned this in a few other places. But when you conduct your inspection through uploading inspections, you flag items and areas where there are issues. And then right from your inspection, you can create work orders and those work orders will then have all of your notes, all of your photos, and they’re ready to be assigned to someone to do that work. In addition, we have a digital unit turn board. So all work orders that are created for an unoccupied unit will be tracked in your unit turn board.

So there’s a ton of automation there in place. If you have a vacant unit, there’s automatically a unit turn board. All work orders that have been created can be tracked in that space. And other members of your team on the leasing side, they can see, okay this is actually ready now. So really, digital tools and all-in-one solutions can help make your team faster. It can help communication between team members and just gives you that view all in one place. So that really helps your team move faster. And also, with the unit turn board key metrics, you can see areas where you could improve. And speeding up your unit turns, that definitely goes straight to your NOI, and inspections are a big part of that.

Megan: Even with templates in place, tracking data through the right tools, getting a big-picture overview of your inspection ecosystem, and implementing smart automation to help teams do their best work, there’s still more opportunity to really nail inspections.

Here’s what Michael and Kelly had to say when we asked them about the most overlooked opportunities for inspections.

Michael Brand: Yeah. I thought this was a great question. So I would say take advantage of technology. Now, I don’t necessarily mean taking advantage of software or even software like ours. I actually mean take advantage of the technology of your staff, using that device in everyone’s pocket. Everyone has a smartphone, they use Facebook, they know how to use the device. Why not take advantage of this tool that everyone has to their disposal?

I also think, again kind of repeating myself here, but one of the most overlooked things I come across all the time is just not having the reporting and insights and an understanding of where their property is or lacking important performance indicators. It’s just nuts how many people do not have their thumb on the pulse of their portfolio.

Kelly Dean: So, two things that you might be overlooking in the inspection process. Most customers that I talk to are at least doing move-out inspections. So those inspections say, okay, what needs to be done? Do we need to clean the carpets? Do we need to paint the walls? What’s the tenant’s responsibility? What’s the owner’s responsibility?

And I’ll say two things that you should definitely be also doing. One is move-in inspections. That way, you have that clear way to compare the move-in to the move-out condition. Those are countersigned by your residents, so then it’s really not up for debate. And the second is preventative inspections, those routine inspections that you should be performing, I think best practice for common areas for apartment complexes would be at least quarterly. Scheduling those drive-bys, making sure all of those spaces are up to your standards and up to resident standards. And then at least annual or semi-annual inspections at the unit level. And we also have data to show that residents are more likely to report issues in a timely manner if they expect routine inspections and are more likely to take good care of the property.

Megan: So what can happen once you take a deep dive into inspections and implement the tips discussed today? Here’s Michael again with a case study that shows just how much really nailing inspections can positively impact almost every aspect of a property management business.

Michael Brand:  There are a couple of great customer stories with some pretty staggering numbers that show and really highlight success. I think Tarragon Property Services is a really good example. There are about 3,000 units, 17 properties in the Northwest around Seattle and Olympia. Their main focus that they wanted to nail was the unit turn. They’ve actually seen time savings of about 20 minutes per inspection, which is a 66% reduction. And this is all while they reduced resident disputes by 50% and hotline complaints have gone down by 75%. To me, that’s incredible. So I’d say that’s a win.

I think Maxus is another really good example. They’re a little larger, and they have about 15,000 units, 60 properties in about 15 states. What they really wanted to nail was the unit turn in maintenance. The numbers that they were able to provide us showed they reduced their unit downtime by a day. This equaled $900,000 saved annually in labor costs, pretty amazing.

They also saved about 10 to 20 minutes per move-in, $50-70,000 savings in labor costs. Another amazing stat about them was we were able to deploy them across 60 properties in one week. So this really is doable. In their case, we simplified things, and we focused on one thing that they really wanted. So we were able to do that. To me, those are some great wins.

Megan: From what Michael and Kelly describe, it’s time to rethink our approach to inspections. They’re not just another item on your property management to-do list. They are essential to driving business goals and outcomes, especially for improving NOI, retaining team members, and keeping resident satisfaction and retention high.

To really nail inspections, you need to do more than simply turn up every year with a maintenance tech. But instead of trying to solve your maintenance operations overnight, start first with what Michael and Kelly suggested:

1. Creating inspection templates to get everyone on the same page about what must be done, and when
2. Prioritizing data collection to get a big-picture view of your entire inspection ecosystem and what’s really happening within it
3. Utilizing tools and technology that field teams will actually use
4. Implementing smart automation to free teams up to do more high-value work.

And remember: Even making small adjustments to improve inefficient inspection processes can have a huge and lasting impact across your entire portfolio.